Food standards: Modeling regulatory changes in trade impact assessments. Simulations with an extended structuralist computable general equilibrium (CGE) model

Is the harmonization of different food standards between countries in the context of free trade agreements exclusively positive, or is there a risk of high social costs for consumers? The harmonization of different national regulations plays an important role in contemporary trade policy. In this paper, the costs and benefits of harmonizing food safety regulations between the EU and the USA are estimated, using the ÖFSE Global Trade Model. The results show that the cost savings for companies due to the harmonization of regulatory standards are significantly lower than the associated negative effects on public health. Trade policy impact assessments must therefore take into account the social costs of regulation.